Papillary thyroid cancer (PTC) is one of the malignancies with an excellent prognosis. However, in PTC, progression or dedifferentiation into poorly differentiated thyroid cancer (PDTC) or anaplastic thyroid cancer (ATC) extremely jeopardizes patients’ prognosis. MMP1 is a zinc-dependent endopeptidase, and its role in PTC progression and dedifferentiation is unclear. In this study, transcriptome data of PDTC/ATC and PTC from the Gene Expression Omnibus and The Cancer Genome Atlas databases were utilized to perform an integrated analysis of MMP1 as a potential regulator of tumor progression and dedifferentiation in PTC. Both bulk and single-cell RNA-sequencing data confirmed the high expression of MMP1 in ATC tissues and cells, and further study verified that MMP1 possessed good diagnostic and prognostic value in PTC and PDTC/ATC. Up-regulated MMP1 was found to be positively related to more aggressive clinical characteristics, worse survival, extracellular matrix-related pathways, oncogenic immune microenvironment, more mutations, higher stemness, and more dedifferentiation of PTC. Meanwhile, in vitro experiments verified the high level of MMP1 in PDTC/ATC cell lines, and MMP1 knockdown and its inhibitor triolein could both inhibit the cell viability of PTC and PDTC/ATC. In conclusion, our findings suggest that MMP1 is a potential regulator of tumor progression and dedifferentiation in PTC, and might become a novel therapeutic target for PTC, especially for more aggressive PDTC and ATC.